As EV Startups Lose Value, Can Mass-Market Brands Finally Close The Gap?

Rivian Automotive's stock prices were in the red again on Monday.

The price of the fledgling electric truck producer hovered around $25 per share in pre-market trade, down more than 12% from Friday's close. Ford's announcement on Saturday that they were selling 8 million Rivian shares is nearly entirely responsible for this. JP Morgan was also likely to sell another block of 13 to 15 million shares in the near future.

Rivian's stock price has dropped by more than 75% since January 1 and is now trading at less than 20% of its peak of approximately $180 per share following the initial IPO. The sell-off occurs as shares held by the initial IPO become available. Rivian has reduced its 2022 production to 25,000 units, down from the 40,000 projected by analysts. This has investors concerned.

Lordstown Motors loses ground

Rivian hasn't yet succeeded in scaling manufacturing, but they're not the only electric vehicle startup having difficulties. On Monday, Lordstown Motors Corp reported a $90 million loss for the first quarter of 2022. The Endurance pickup has been delayed until the second half of 2022. This was exacerbated by Lordstown CEO Daniel Ninivaggi's announcement that the Foxconn contract had not yet been finalized. 

"We made considerable progress toward introducing the Endurance during the first quarter, despite exceptional supply chain hurdles," Ninivaggi said in the news announcement. Our top aim is to get the Endurance into the hands of customers so they can experience the truck's unique features for themselves. We're also working closely with Foxconn to complete our pending acquisition and improve our manufacturing and product development collaboration."

In early trading on Monday, Lordstown stock plunged as low as $1.61 a share, just over 10% below its 52-week high and even lower than its all-time high of more than $29 per share. Let’s hear more on what CBT has to say.

Mass-market brands hold ground

While startups struggle to find investors, mass-market brands are holding their ground. General Motors is down around 32% year on year but remains well-positioned in comparison to their EV truck competitors. Except for Ford, which has brought the Ford F-150 Lightning to market on a relatively short timeline. Ford stock has risen 17 percent in the last year.

Investors have demonstrated that investment stability is critical, and the major players in electrification are no exception. Tesla's drop on news that CEO Elon Musk was buying Twitter is a prime example of the type of security investors want to see. Stellantis, whose electrification plans appear to lag far behind those of the other Detroit automakers, has fared better than the startups mentioned.

While electric trucks are sure to be popular among consumers due to their efficiency, storage, and versatility, the current picture shows that the major automakers will fare far better in their transition to alternative fuels than the startups aspiring to be disruptors. It's reassuring for dealership sales and service models, as well as the million-plus people who work for them.

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Sources article: Unrau, J., 2022. As EV startups shed value, mass-market brands take foothold in electric cars. [online] CBT Automotive Network. Available at: <https://www.cbtnews.com/as-ev-startups-shed-value-mass-market-brands-take-foothold-in-electric-cars/> [Accessed 11 May 2022].